Sunday, December 02, 2012

Mr. Obama, scarred by failed negotiations in his first term and emboldened by a clear if close election to a second, has emerged as a different kind of negotiator in the past week or two, sticking to the liberal line and frustrating Republicans on the other side of the bargaining table.

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It would be, but of course the answer isn't always spending. It's counter-cyclical budgeting.

His theories have been orthodox for decades, and yet we have high unemployment and a boom or bust economy.

Nothing in American (or European) policymaking from 2000-2008 qualifies as Keynesian, and the difference between Europe and America post 2008 provided an excellent real-world experiment in austerity budget vs stimulus.

Maybe it shouldn't be. Keynes promised "full employment" and the end of the business cycle. His theories have been orthodox for decades, and yet we have high unemployment and a boom or bust economy. The solution, however, is always "well maybe try more Keynsianism?"

The problem isn't Keynes it is that we only do half of what we are supposed to do. In years past we got around this by having prolonged boom periods where we simply couldn't spend fast enough that are costs would outpace growth.

I'm fine with a lower corporate tax rate. I'm interested in grabbing the most revenue that I can to fund a government that seems to be in search of revenue. That's the issue with CA right now. Whatever you are at the political spectrum, having a government that is stable and working is much better for society that a government that provide the basic services that that society demands.

I agree with your larger point. You should not discuss Medicare in the current context. Our current budget 'problem' is largely a political one. The long term budget problem is structural and is essentially 100% about Medicare (demographics).

Of course, that's not simply a 'who pays' question. It's also a demographics/cost control question. (Give us your tired, your poor, your huddled masses between the ages of 14 and 26...)

I agree with the idea that we've got a demographics problem with Medicare (I'd flip it, though - and say cost control/demographics).

Addressing Medicare as a standalone issue, I'd personally want to do it in three phases:

1) First, we need to unwind the Medicare expenditures that are not directly related to beneficiary care
- For example, why does Medicare fund virtually the entirety of national residency training programs (to the tune of about 8-9 billion annually)?

I can understand - and even agree with - the perspective that training new physicians is a national good and thus, something to be subsidized (or even paid for in total, as it is now) by the Feds... but "hiding" this is in Medicare obscures that cost. I would also want the hospital industry to explain how they can, on one hand - be deadset on the idea of 'free enterprise', when as an industry, they're essentially getting their practitioner training paid for in a way that other industries (say... building trades... are not).

I'm perfectly willing to fund some of these things publicly - but it's easier/better to have discussion about levels of funding and appropriateness if we don't blackbox them into Medicare

2) Next, we need to look at cost controls...
Part of this requires a larger health care discussion -- i.e., the pps model is just a structurally bad model (so far as cost control goes). Fee for service is great if your goal is to make money by providing a service -- but if our health care system in general (and Medicare specifically) then we need to seriously consider junking this model almost entirely. This is something that is sure to be a battle royal discussion with a lot of shifting (and odd) allegiances, but it's one we need to have. I have very little hope results come from this.

Smaller items?

For one thing - we ought to look at the fact that right now, there is ZERO impetus for the MACs that process Medicare reimbursement to do anything to souse out fraud... nothing - they get rewarded by faster processing. Now... one of the reasons people like Medicare is because it doesn't behave like an insurance company (i.e., question a claim and whether it's medically necessary). We can go slow with this, and proceed gingerly -- but there badly needs to be some form of claims control in the system.

For another - things like the new IPAB (the whole 'death panel' genesis), really needs power to be more active in setting reimbursement rates on certain procedures. Providers are badly gaming the system now - overusing and abusing dubious treatments (which are still valid treatments) because they grow into profit centers, etc. There are mechanisms already in the system that try to deal with this (the case-mix component of reimbursement formulas, etc) - but they're currently failing.

3) NOW - I think we can talk about benefits and eligibility
Here, I would think out of the box (i.e., more than just cutting benefits or raising the eligibility age)... For example - what about an early buy-in to Medicare -- something that would essentially deliver under-65 beneficiaries Medicare inclusion, but set their premiums with an MLR of say... 75% (which is lower than ACA's private plan MLR)? In other words - you can buy a Medicare policy under 65 - but your premium will be set at according to a 75% MLR, with Medicare generally pocketing the 25% overhead to subsidize older/over-65 beneficiaries?

I'm pretty sure Keynes would tell you that we've never really tried what he suggested, and that, for example, the stimulus passed four years ago was WAY too small.

So we can't figure out a good model for baseball defense, but we should be confident enough in our ability to predict and control the economy to goi massively into debt and totally debase the currency by creating a massive stimulus out of thin air?

While people are talking tax rates, are most people here in favor of lower corporate income tax rates? I know that both Obama and Romney were in favor of reducing the current top rate. Ireland's top rate is very low (12.5%), but something around the Dutch (25%) or French (33.33%) rate could be a nice starting point.

So long as we are sure to recognize the difference between the topline rate and the effective corporate tax rate - sure, absolutely.

It's quite true that the US has among (if not the) highest printed rate, but the effective US corporate tax rate is very much on the low end.

The problem with this is that it is the huge corporations that can afford to take advantage of the swiss cheese code to get things like the GE zero dollar tax bills while the small businesses who can't, get screwed.

I'm all for a system that gives a break to small and medium size company, while screwing over the larger competitors who can essentially play around with their massive balance sheets to ensure that they can offset earnings in various ways that aren't possible for small businesses.

So we can't figure out a good model for baseball defense, but we should be confident enough in our ability to predict and control the economy to goi massively into debt and totally debase the currency by creating a massive stimulus out of thin air?

Keynesians are only Keynesians when it's the party side of the cycle, not when it's cleanup time.

The problem isn't Keynes as much as the phony Keynesians. The people proclaiming that down times aren't the time for austerity (which is a reasonable argument in itself) certainly didn't show any inclination to fiscal prudence in the up times. Everybody doled out the goodies before they even arrived from the bakery.

It would be nice if we had countercyclical spending, but Republicans *and* Democrats on the federal *and* state level spent the boom times burning through dough faster than Sam streams out invective. There's absolutely zero reason to think there's going to any belt-tightening when times are good, so future belt-tightening can't be part of any realistic current planning.

At this point, the only way we'll *ever* have higher taxes on a wide swath of the population or *ever* have cut spending more than at the gentlest periphery. The major parties have been very successful at combining to tell the American people that they can eternally get more and/or pay less. Now all that's left is to close our eyes, jump off the cliff, and hope that we timed the waves correctly.

for the record i am also in favor of phasing out the mortgage interest rate deduction over 10-15 years.

I would definitely being for simplifying the tax code, especially the corporate one. There are too many deductions and exemptions that distort the economy. Getting rid of the schedule A would be a good thing, but over a 10-20 years (reduce it by 5% a year).

I would get rid of corporate tax on dividends. Tax the corporation on what it keeps, which would increase dividends and the hoarding of cash and all the pointless mergers.

I would raise the dividend and capital gains tax to normal tax rates in return to keep up the amount of taxes.

The big problem with tax reform -- at least, in the context of the 'fiscal cliff' -- is that it's simply not possible to craft in a couple weeks. It's going to be a 3-6 month process and it's going to require everyone telling their own ideological fellow travelers and constituencies to take a hike while it gets hammered out.

But yes, absolutely - I fully and wholeheartedly support tax reform*

*Though, do note - another key point from the linked article I agree with - we shouldn't view this as a "one and done" thing... We're going to need to another major tax reform effort in 25-30 years. Historically, that's how it works -- the hedges never stay trimmed, nor should they -- there will be times when we want to goose certain industries or shore up certain areas of the economy (and there will also be gifts to prized favorites). These are natural things that we ought to expect. But -- our last major tax reform effort was in 1986. We're due. It's time to trim the hedges again.

So long as we are sure to recognize the difference between the topline rate and the effective corporate tax rate - sure, absolutely.

It's quite true that the US has among (if not the) highest printed rate, but the effective US corporate tax rate is very much on the low end.

The problem with this is that it is the huge corporations that can afford to take advantage of the swiss cheese code to get things like the GE zero dollar tax bills while the small businesses who can't, get screwed.

I'm all for a system that gives a break to small and medium size company, while screwing over the larger competitors who can essentially play around with their massive balance sheets to ensure that they can offset earnings in various ways that aren't possible for small businesses.

This reminds me of a NY Times article I read the other day about Texas and its subsidies it provides to companies willing to move or establish a branch in Texas. Basically, the gist of it was that even as companies took advantage of it, even they were worried about schools getting their funded slashed due to reduced tax revenue for public schools.

Then there's a tool name G. Brint Ryan who runs an accounting firm specializing on 'tax' reduction, where he pays legal kickbacks to the government for favorable tax laws, to help reduce a company's tax rate, and then pockets 30% of the difference. He even sued AMD after they hire his firm to run an internal company audit(and not related to taxes at all) and then decided to not peruse a reduction in their taxes by $30 million. Chump change for a company like AMD, but worth $10 million for Ryan.

“It’s continuing evidence that they’ve placed their interest above our own and continued to press this issue,” the representative said. The company said Ryan LLC’s behavior “bordered on harassment.”

At one point, Mr. Ryan wrote to the chip maker’s chief financial officer. “At stake is tens of millions of dollars in tax recovery and future tax savings on an issue I have WON for other fabs in Texas,” he said, referring to fabrication facilities.

The company’s choice not to seek the tax break, Mr. Ryan said in a deposition, was an “irrational and unreasonable decision.”

Let me say that again, he sued a private company because they didn't want their tax rate changed.
What a country, and state.

I don't have a problem with home ownership. Part of my problem with the mortgage deduction is what you are describing. However, I also think it's unfair that a person/family that moves frequently for work or those who choose to rent for other reasons also cannot claim a deduction.

McCoy,

Sure. I am not clear what your point is though. Are you saying that's a reason to maintain the status quo?

I would love to hear from those that don't like Keynesian Economics to state what the replacement economics is. Supply Side? Rational Expectations? Montarism? Austerity like in Europe (working out great there)?

And also when was an end to unemployment promised? I must have missed that in grad school. I don't think anyone ever promised sunshine, rainbows and ponies for everyone, just better than before (which btw we have).

So we can't figure out a good model for baseball defense, but we should be confident enough in our ability to predict and control the economy to goi massively into debt and totally debase the currency by creating a massive stimulus out of thin air?

Where, exactly, is this "debasing the currency?" Because I don't really see any evidence of that in the real world.

Keynesians are only Keynesians when it's the party side of the cycle, not when it's cleanup time.

Well Dan, rational observation of the last 20-30 years would indicate that when you elect real Keynesians they inact Keynesian policies (Clinton, Obama.) When you elect Austrian radicals, they screw everything up.

for the record i am also in favor of phasing out the mortgage interest rate deduction over 10-15 years.

I think a more likely result is capping it, as well as eliminating it for second homes. I also think you would need a longer phase out period, as this will hit housing values and put some people underwater.

At this point, the only way we'll *ever* have higher taxes on a wide swath of the population or *ever* have cut spending more than at the gentlest periphery. The major parties have been very successful at combining to tell the American people that they can eternally get more and/or pay less. Now all that's left is to close our eyes, jump off the cliff, and hope that we timed the waves correctly.

This is another reason why I'm OK with going over the cliff...

Some of that is partisan obstinacy, I admit --

But a grand tax reform effort (as alluded in 614) is probably only possible if we can start with the pre-2001 baselines.

In such a context - yes - with the proper amount of reform, I am absolutely and perfectly willing to see a topline statutory rate for the top quintile under 39.5%... Heck - show me the numbers via extensive IRC trimming and I might even come damn close to 35% (without doing the impossible at this point math - I suspect the number I'd settle on would be around 36/37%, but whatever).

The problem, of course, is that yes - we're almost certainly going to dip into a recession, and at a time when Europe and Asia (depending) are already in a recession or struggling to stay out of one.

But - I'll take the short-term pain for the long-term gain.

...doesn't mean I oppose a fiscal cliff deal if one could be worked out - but frankly, it might be best for us to dive over it. Then, I think both parties will be in a place where they have more room to maneuver.

Bitter/McCoy/Sam - Austrian school is the only way to go. Any system in which money is created out of thin air is going to end in failure, and can only create bubbles that must be followed by busts. Under such a system, bankers accumulating a disproportionate amount of wealth and hence disproportionate political influence is not just a risk, it is inevitable.

(1) "Big Bang Theory" is the most insultingly anti-nerd show ever made. It's predicated on the idea that it's hilarious that some people value science and learning

.

This was my tacit assumption about the show (as a card-carrying scientist and multi-dimensional nerd), and I avoided it like the plague. HA HA LOOK AT THE NERDS TRYING TO BE HUMANS.

But I ended up catching a few episodes and it doesn't really have that vibe at all. It is (of course!) chock full of stereotypes (East Indian, Jewish, Southern, Dumb Blond to name a few) but... regarding the Sciency/Nerdom sterotypes - it's more like the Dukes of Hazzard was to Rednecks (Did Rednecks/Southerner non-Rednecks get offended by Dukes of Hazzard? Honestly, no idea).

It is sort of "HA HA NERDS TRYING TO BE HUMAN" but instead of being offensive, I think it actually shows... Nerds being human. The comics books and trek jokes are just the setting.

Not that it's a brilliant example of modern television, heck I barely LIKE the show - but I don't think that it's insultingly anti-nerd (even though that was my initial assumption).

Sure. I am not clear what your point is though. Are you saying that's a reason to maintain the status quo?

I'm saying that tax deductions in all of their various forms lead to decrease costs for housing, whether it be renting or owning. So mortgage deductions aren't really an incentive to own as compared to renting since as a renter all those various deductions are in part reflected in your monthly rent.

Growth (and the consequent reduction in public debt/deficits) during the Clinton years was largely a product of the mass accumulation of private debt. That's not Clinton's fault, but I'm not sure he deserves much credit for balancing the public budget given what was actually going on.

Where, exactly, is this "debasing the currency?" Because I don't really see any evidence of that in the real world.

In case you haven't noticed, the price of gold in US dollars has gone from $35 an ounce to over $1700 in 42 years. Inflation, which is running wild right now, is a direct indicator of currency debasement. If the CPI or another, possibly realistic, measure of consumer prices ever went down, instead merely stalling in its rise, we could say that inflation itself doesn't indicate a devaluing currency, but that is not the case. Since practically every currency on earth is a fiat, and the reserve currency is USD, comparing international currencies to the USD isn't very useful in this regard.

I think a more likely result is capping it, as well as eliminating it for second homes. I also think you would need a long phase out period, as this will hit housing values and put some people underwater.

Right - though, I don't think a "long phase out" period works because again - lawmaking and tax policy is ephemeral... build in a 10-20-whatever year sunset and I can almost guarantee it won't last.

We need to get rid of this idea that we can "fix" anything once and for all - we can't, we never have, and we might as well accept that. Every generation or so, we build a good foundation, then remodel as appropriate and necessary, and eventually -- we move again and build a new foundation and start remodeling yet again.

It's one of the big problems I have with comparing the national budget to one's personal portfolio and wallet... In theory - the US doesn't have a "lifespan", so it's not appropriate to talk about when we should be saving, when we should be investing, and when we should be cashing out.

We have a national, cyclical series of events that we need to react to -- and so will our kids and our kids' kids.

It's one reason why I hate the capped deductions idea, too -- while I'm cognizant of artificially keeping bubbles inflated, there are most certainly periods where I would want to juice certain industries. There are times where I might decide it's worthwhile to float, say, the homebuilding industry because of certain externalities.

I completely understand that some people inherently oppose such broad 'social engineering through tax policy' -- but this has been the way of the world since something like taxes came to be.

Bitter/McCoy/Sam - Austrian school is the only way to go. Any system in which money is created out of thin air is going to end in failure, and can only create bubbles that must be followed by busts.

There were more, and more severe, bubbles and busts when we were on the gold standard.

Which makes sense when you think about it. You're on the gold standard. Suddenly somebody discovers the next Sutter's Mill. Boom! You're currency is suddenly inflating wildly with no regard for the actual economic situation. Maybe gold finds begin to plateau. Bang! Money becomes tight for completely exogenous reasons. That's no way to run an economy.

Look at the chart of real gold prices. They bounce up and down completely randomly. That's what you want as the bellwether of your economy?

Yes, during the 1990s I was also living in a cave, on Mars, with my fingers in my ears.

Oh, you mean the progressive Keynesians who cried for most of the 90s about the horrid things Clinton and the Republican Congress were doing and how people were going to die on the streets? Funny you should all go from rabid leftists to Third Way advocates when it comes time to get the credit.

But you're right, I was wrong. Governments of the states run by Democrats did such a wonderful job during the boom times cutting fat from the budget and preparing for the down times, and are reaping the benefits of all that responsibility now with their sleek, efficient governments, with no long-term structural nightmare. I'd ask for some cocaine, but you guys have already snorted it. Don't worry, the septum's kinda overrated anyway.

Bitter/McCoy/Sam - Austrian school is the only way to go. Any system in which money is created out of thin air is going to end in failure, and can only create bubbles that must be followed by busts. Under such a system, bankers accumulating a disproportionate amount of wealth and hence disproportionate political influence is not just a risk, it is inevitable.

Gold itself has a bubble that's just waiting to burst. And oddly enough, under the gold standard, we followed a quite long boom and bust cycle. The only thing that has gotten us off this cycle is the use of fiat currency.

There were more, and more severe, bubbles and busts when we were on the gold standard.

A gold standard is only part of the equation. Unlimited fractional reserves are more of a problem. Each loan issued as debt can only ever be repaid in full if more debt is created to pay for it. Regardless of whether the bubble gets big or colossal, when it bursts the debts have to be written off (which rarely happens) or actual material wealth (i.e. houses) must to be exchanged for fake paper/electronic wealth.

Oh, you mean the progressive Keynesians who cried for most of the 90s about the horrid things Clinton and the Republican Congress were doing and how people were going to die on the streets? Funny you should all go from rabid leftists to Third Way advocates when it comes time to get the credit.

Well, which is it? Are there no Keynesians, or is it only the (pretty tiny) left fringe of the Democratic Party who aren't true Keynesians?

There were more, and more severe, bubbles and busts when we were on the gold standard.

This.

In fact, while I'm no economic historian - I think that's true no matter which epoch you want to use... Nixon and the gold standard, FDR, Jackson/BotUSA, or all the way back to the collapse of the Spanish empire.

There's an awful lot of history - while the US and other nations were operating under a gold standard - that needs to be explained before I'd give the gold bugs more than an eyeroll.

In case you haven't noticed, the price of gold in US dollars has gone from $35 an ounce to over $1700 in 42 years. Inflation, which is running wild right now, is a direct indicator of currency debasement

Inflation is not running wild, it stands around 2-2.5% right now and, more importantly, has been fairly predictable. Claiming inflation is high because the price of a single commodity has increased rapidly is as misguided as claiming we must be experiencing deflation because personal computers are much cheaper than they were in 1985.

A gold standard is only part of the equation. Unlimited fractional reserves are more of a problem. Each loan issued as debt can only ever be repaid in full if more debt is created to pay for it. Regardless of whether the bubble gets big or colossal, when it bursts the debts have to be written off (which rarely happens) or actual material wealth (i.e. houses) must to be exchanged for fake paper/electronic wealth.

In other words, society evolves too fast?

I can think of a whole host of human endeavors -- not just US advances, but human endeavors -- that either never occur or we might still be waiting on if not for some form of fiat currency/debt financing exceeding reserves... I mean, I won't godwin things by saying we'd never have beaten the Nazis -- we might well well still be waiting to settle the new world.

EdIT: Which, I suppose, the liberal in me must admit might be a good thing for the original natives of the 'new world'... hell... they might have ended up colonizing Europe.

Money is a conceptual thing, it is not real. Fiat money is the way to go because it matches the reality of money. Value is a real thing, but value still exists in Gold, houses, salt and so on. Money is not the same thing as value though, money is just a counter and makes much more sense as a fiat.

Inflation, which is running wild right now, is a direct indicator of currency debasement.

Right - though, I don't think a "long phase out" period works because again - lawmaking and tax policy is ephemeral... build in a 10-20-whatever year sunset and I can almost guarantee it won't last.

Correct, although it is there almost regardless of the time. Phase it out over five years, for example, and it still can be changed.

It's one reason why I hate the capped deductions idea, too -- while I'm cognizant of artificially keeping bubbles inflated, there are most certainly periods where I would want to juice certain industries. There are times where I might decide it's worthwhile to float, say, the homebuilding industry because of certain externalities.

But doesn't capping make it easier to do this? It is easier to increase the cap (and thus juice the homebuilding industry) than it is to add a mortgage exemption where none existed before (and likely less of a hit on tax revenue).

I know based on my day to day experience that inflation is not 2-2.5%, and if you were being honest with yourself you would too. The CPI is garbage. John Williams's Alternate Inflation Stats are much more believable, and show that the actual rate has been running around 6% for the last decade, which indicates a doubling period of 12 years.

Gold has very limited industrial or practical uses beyond looking pretty. It is not steel or timber or oil. It has value because people think it has value, just as the fiat currency has value because people think it has value.

The value of gold, of course, is produced through the natural and self-evident process of look! shiny~!

When every society on earth for the last 5000 years has agreed that gold is valuable, I'll go with that. People seem to think gold is just lying around in the dirt if only we'd pick it up. It is a rare element, and costly to mine. Unless someone figures out the secrets of alchemy, its demand will always exceed its supply. Unlike paper.

But doesn't capping make it easier to do this? It is easier to increase the cap (and thus juice the homebuilding industry) than it is to add a mortgage exemption where none existed before (and likely less of a hit on tax revenue).

Are we talking about a whole deduction bucket cap or just specific caps to the housing exemption? I wasn't clear in my original - but I don't like the idea of a capped exemption bucket.

I'm fine with most forms of mortgage deduction caps -- sure, absolutely, eliminate the 2nd home and cap the primary residence at whatever ($500K? Does that work? Fine by me). I don't like HW's total phase-out independently... and I don't like looser caps on a full deduction bucket.

When every society on earth for the last 5000 years has agreed that gold is valuable, I'll go with that. People seem to think gold is just lying around in the dirt if only we'd pick it up. It is a rare element, and costly to mine. Unless someone figures out the secrets of alchemy, its demand will always exceed its supply. Unlike paper.

Not a whole lot more than a few centuries ago, you could have said the almost the same thing about horses...

While people are talking tax rates, are most people here in favor of lower corporate income tax rates? I know that both Obama and Romney were in favor of reducing the current top rate. Ireland's top rate is very low (12.5%), but something around the Dutch (25%) or French (33.33%) rate could be a nice starting point.

Since large corporations don't really pay taxes anyways, it doesn't matter much. ;) A low corporate tax rate (probably ~0% for businesses with < million dollars revenue, and then some fairly low rate above that) is fine, good even, as long as it's combined with an appropriate personal tax rate (somewhere between 50% and 80% as the marginal tax rate on incomes above a million dollars a year or so). I'm a conservative - I'm nostalgic for the 1950s (or at least, it's tax rates ;) ). Corporations can move around; people can't. People are the right place to take taxes from; even if we feel bad about not taxing Mariott, the real problem is that we're also letting Romney not pay taxes on the hundred million (or whatever) he's taking home. Mariott can move its headquarters to avoid the tax, or hide it in whatever tax shelter; it's much harder for the board members to do that (well, unless you let them.)

FWIW, in the last off-topic thread, I got roughed up a bit for suggesting that Clinton is one of the best three presidents in the last fifty years; a lot of that was precisely because he pursued the appropriate Keynesian program of eliminating the deficit and paying down the debt. I guess "Picking the right answer that everyone knows is the right answer" is a pretty low bar; but most presidents don't make it over that.

When every society on earth for the last 5000 years has agreed that gold is valuable, I'll go with that.

So instead of having one organization accountable to a governing body in charge of the money supply, we should give control to a bunch of unaccountable mine owners? Especially when many of those mines are located in brutal, unstable overseas nations?

When every society on earth for the last 5000 years has agreed that gold is valuable, I'll go with that. People seem to think gold is just lying around in the dirt if only we'd pick it up. It is a rare element, and costly to mine.

You are correct, it is costly to mine. Which means if somebody invents better gold-mining technology, you get an inflationary burst. Which makes no sense as a way to run a monetary system.

Gold was used by societies not because people wanted lots of shiny disks to look at in their spare time. Gold was used because it was a fairly compact liquid medium of exchange. But a paper hundred-dollar bill is equally compact and liquid. Digital banking accounts are even more compact and liquid. It's the liquidity that gives things value, not the effort required to extract them from the earth.

An example I used earlier was the Roman expedition to the Baltic in search of amber. The expedition brought along trunks of silver coins. To the Romans, that was a liquid medium. But the Baltic tribesmen didn't want silver. It was useless to them. The bronze tools and armor the Romans had, however, were valuable. Meanwhile, the amber was of little consequence to the tribesmen. It washed up on the shore. So the Romans traded their bronze scraps for piles of amber. Both sides thought they were fleecing the other. None of the commodities involved -- bronze, silver, or amber -- had a fixed value.

Even 6% inflation (which for the record I don't believe - Shadow Government Statistics, American Business Analytics & Research LLC - does not inspire confidence in me) is not runaway.

When every society on earth for the last 5000 years has agreed X, I'll go with that.

Where x is any random stupid thing ever does not convince me. I should base my science, social mores, economy, or whatever based not on modern understanding learned and developed over time, but instead on the rock simple things a wide variety of primitive civilizations believed? No thanks.

I'm wary of using an object or material as a main form of currency. That could be anything from wheat, salt, to gold. Allowing 'money' to be used allows these other goods to be used for their primary purpose, in the creation of goods.

I know based on my day to day experience that inflation is not 2-2.5%, and if you were being honest with yourself you would too. The CPI is garbage. John Williams's Alternate Inflation Stats are much more believable, and show that the actual rate has been running around 6% for the last decade, which indicates a doubling period of 12 years.

Well... honest with myself and giving Williams $175 a year for his honest insights.

I'm somewhat familiar with Williams in passing - I have a vague recollection of him coming up threads and threads ago, didn't he? I'm pretty sure he was a Kehoskian reference for one of the BLS LIES! discussions...

If you're on a gold standard, you have to guarantee your money is convertible to gold. That means your central bank sets its interest rates according to how much gold is on hand. If you happen to be losing gold, you have to raise interest rates, reduce the amount of money in circulation, so you can stay on the gold standard.

If — just suppose — you're in an economic downturn, and people are pulling a bunch of gold out of the banks, then you raise interest rates and reduce the amount of money in circulation, which keeps you on the gold standard... but also is exactly the opposite of the monetary policy you want when people are losing their jobs. It stops economic activity dead.

In other words, this modern crying-out for a gold standard in the midst of an economic crisis is of a piece with all the other claims that we ought to adopt policies not because they will help, but because they're painful, and we deserve pain, don't we? We've been very, very naughty, or we must have been, to get into this kind of trouble, and we need to punish ourselves. Or at least, Ron Paul needs to punish you. And trust me, this will hurt you more than it hurts him.

We need to get rid of this idea that we can "fix" anything once and for all - we can't, we never have, and we might as well accept that. Every generation or so, we build a good foundation, then remodel as appropriate and necessary, and eventually -- we move again and build a new foundation and start remodeling yet again.

Absent an acknowledgement that those programs are fundamentally around to stay, and fundamentally not going to be voucherized, intentionally weakened for purposes of undermining, privatized, etc -- no dice.

Side by side, just for fun.

It's one of the big problems I have with comparing the national budget to one's personal portfolio and wallet... In theory - the US doesn't have a "lifespan", so it's not appropriate to talk about when we should be saving, when we should be investing, and when we should be cashing out.

There's a funny thing about investing - you expect to get a return at some point. You can't just call everything an investment, and when no signs are shown of actually getting anything from the particular investment, call anyone who questions the investment a bad person (not specifically you, the general you, though it applies to some in this thread).

There's a funny thing about investing - you expect to get a return at some point. You can't just call everything an investment, and when no signs are shown of actually getting anything from the particular investment, call anyone who questions the investment a bad person (not specifically you, the general you, though it applies to some in this thread).

The return is the amount of tax payers being able and willing to pay taxes in the future.

We need to get rid of this idea that we can "fix" anything once and for all - we can't, we never have, and we might as well accept that. Every generation or so, we build a good foundation, then remodel as appropriate and necessary, and eventually -- we move again and build a new foundation and start remodeling yet again.

Absent an acknowledgement that those programs are fundamentally around to stay, and fundamentally not going to be voucherized, intentionally weakened for purposes of undermining, privatized, etc -- no dice.

Side by side, just for fun.

It's one of the big problems I have with comparing the national budget to one's personal portfolio and wallet... In theory - the US doesn't have a "lifespan", so it's not appropriate to talk about when we should be saving, when we should be investing, and when we should be cashing out.

There's a funny thing about investing - you expect to get a return at some point. You can't just call everything an investment, and when no signs are shown of actually getting anything from the particular investment, call anyone who questions the investment a bad person (not specifically you, the general you, though it applies to some in this thread).

But you're comparing apples and oranges by juxtaposing these two things...

I'm saying the US doesn't have a "lifespan" in the personal sense -- i.e., there's a time to take risks, a time to get conservative, a time to cash-out... but that doesn't mean we don't have cycles.

I don't argue that every federal investment has paid off handsomely, nor - that the one's that have didn't have their issues...

But looking throughout the course of US history, what 'spending mistakes' have we made that you would have eliminated?

I don't see the point of the US going to the gold standard as a whole - each of us already has the ability to convert our currency pretty easily into our desired standard. For some people, they put their currency in gold. Some in real estate. Some in beer or strippers or cocaine. As long as the government doesn't interfere with my private interactions between other consenting adults or groups of consenting adults, I don't really care all that much.

I know based on my day to day experience that inflation is not 2-2.5%, and if you were being honest with yourself you would too. The CPI is garbage. John Williams's Alternate Inflation Stats are much more believable, and show that the actual rate has been running around 6% for the last decade, which indicates a doubling period of 12 years.

If one followed that metric, inflation was at least as bad if not worse between 2000-2008, a period when absolutely nobody was running around crying about inflation or fiat money or the Fed's balance sheet.

But looking throughout the course of US history, what 'spending mistakes' have we made that you would have eliminated?

Oh, I'm not getting roped into this little game again, when one names specifics and the liberals label everything as "too important to eliminate" or "too small to eliminate" and then call names. Fool me once, shame on you, fool me twice, shame on me. Given the discussion here of cuts of public radio/television and Head Start, it's futile.

Only a plurality (and not a majority)of Republicans think the election was stolen by an organization that does not exist!

I imagine a large overlap between these 49%-ers who think ACORN's Afro-jihadist army stole another election for Hussein X and these folks also referenced in the above article:

Some GOP voters are so unhappy with the outcome that they no longer care to be a part of the United States. 25% of Republicans say they would like their state to secede from the union compared to 56% who want to stay and 19% who aren't sure.

The CPI is garbage. John Williams's Alternate Inflation Stats are much more believable, and show that the actual rate has been running around 6% for the last decade, which indicates a doubling period of 12 years.

But looking throughout the course of US history, what 'spending mistakes' have we made that you would have eliminated?

Oh, I'm not getting roped into this little game again, when one names specifics and the liberals label everything as "too important to eliminate" or "too small to eliminate" and then call names. Fool me once, shame on you, fool me twice, shame on me. Given the discussion here of cuts of public radio/television and Head Start, it's futile.

OK...

Then I guess I'm not understanding the oddness of the juxtaposition of those three items... other than the fact that they all have an element of temporal/chronological allusion to them.

Boston's "Big Dig" (although an argument can be made that it was the appallingly bad management of the project moreso than the underlying idea itself that was the problem

The money given to the Shah of Iran

OK - but I guess I was referring to more broad-based spending rather than individual appropriations (I'd agree with BM's 676 in that regard... our defense spending for 40 years was essentially an effort to bankrupt the Soviets... we did that... so why are we still playing the game when we're the only player left?)

I was thinking more along the lines of say.... massive, national infrastructure spending -- transcontinental railroads, the interstate highway system, Medicare, Social Security, building a navy in general, etc.

OK - but I guess I was referring to more broad-based spending rather than individual appropriations (I'd agree with BM's 676 in that regard... our defense spending for 40 years was essentially an effort to bankrupt the Soviets... we did that... so why are we still playing the game when we're the only player left?)

Because we're now playing the same game with China, except they just rolled their eyes and laughed at the foolish Americans as their corrupt officials pocket millions of kickbacks and bribes.

Again, go read the link a couple pages back on Roger Ailes recruiting Petreaus to run for POTUS. There's a lovely nugget in there where Petreaus admits he's leaving the military to go to CIA because he thinks the military budgets are going to be cut but CIA is a "growth industry."

Hey, I like beer myself. A lot. If someone wants to invest in strippers or cocaine, it's not of my business.

Beer is no longer a good investment. Now that ebay is cracking down on beer sales, my closet went from a market value of about $1,500 to a lot closer to zero pretty quick. Not that I really planned to sell any of it, but now doing so is more or less out of the picture even if I wanted to.

Boston's "Big Dig" (although an argument can be made that it was the appallingly bad management of the project moreso than the underlying idea itself that was the problem

I would tend towards the latter analysis - Boston, not unlike plenty of other cities (or virtually every city east of the Mississippi) was inherently built around an age without automobiles and other forms of mechanized transit. There's going to be a need for changes and (massively costly) upgrades -- I'd be OK going a European route of extensive mass transit systems, but Americans tend not to like that.

I don't think it's much different than looking at say... Chicago's sewer and water system, a hodge-podge of century-only infrastructure that could badly use a big makeover (some of which is occurring, but occurring piecemeal).

I was thinking more along the lines of say.... massive, national infrastructure spending -- transcontinental railroads, the interstate highway system, Medicare, Social Security, building a navy in general, etc.

I've said it before but these really small cities on the East Coast should ban cars. Both DC and Boston should just ban cars and only allow mass transportation to use the roads in most of the city. Let people walk, bike, and segway around the city. Giant cars are an absolute waste of space and resources in these small little cities.

I was thinking more along the lines of say.... massive, national infrastructure spending -- transcontinental railroads, the interstate highway system, Medicare, Social Security, building a navy in general, etc.

i am putting that out there because it's more recent and folks can research on-line to appreicate how stupid that legislation was and how it served no legitimate purpose other than to spend money in a frivolous manner

I've said it before but these really small cities on the East Coast should ban cars. Both DC and Boston should just ban cars and only allow mass transportation to use the roads in most of the city. Let people walk, bike, and segway around the city. Giant cars are an absolute waste of space and resources in these small little cities.

I live in a major midwest city, not an east coast city -- and I'd be fine with this... except:

How do we unwind the urban/suburban issues?

To wit - I work in the burbs, live in the city. I'd be fine with public transit, except - it's woefully inadequate (I suppose I'd be OK with the transfers and longer commute times via mass transit, but the fact that I've only got literally two options - 8 AM and 10 AM outbound, 4 PM and 6 PM home -- won't work).

Of course, I'm just using myself as an example -- not a reason to dictate policy, but there's a fair bit of that.

Or - I'd be equally fine with Big Government forcing my company into accepting a more permanent telecommuting solution. If I didn't have to drive to work, I'd almost certainly save myself the hassle and expense of a car.

i am putting that out there because it's more recent and folks can research on-line to appreicate how stupid that legislation was and how it served no legitimate purpose other than to spend money in a frivolous manner

Disagree on Part D... though, I think there are a ton of things that bill could have done differently (and better)... but inherently, pharmaceuticals are an increasingly important part of modern health care. I see very good and proper reasons for them to be included in what is a public health insurance program.

I will say that the role and extent to which pharmaceuticals are a part of modern health care is an interesting medical debate, but any way you slice it -- it's certainly has a bigger role than it did at Medicare's inception.

To wit - I work in the burbs, live in the city. I'd be fine with public transit, except - it's woefully inadequate (I suppose I'd be OK with the transfers and longer commute times via mass transit, but the fact that I've only got literally two options - 8 AM and 10 AM outbound, 4 PM and 6 PM home -- won't work).

Of course, I'm just using myself as an example -- not a reason to dictate policy, but there's a fair bit of that.

Or - I'd be equally fine with Big Government forcing my company into accepting a more permanent telecommuting solution. If I didn't have to drive to work, I'd almost certainly save myself the hassle and expense of a car.

Car parks, which would need to be created anyway for all the commuters coming into the city.

They already have them but I don't think they'll catch on because there is no point to them. Self-driving buses and trains sure but cars no. Then again I doubt anyone really wants to have no one in control of a vehicle that is carrying hundreds of people.